Arizona Aims to Cut Medicaid to 280,000 Individuals - January 25, 2011

On Jan. 20, Arizona lawmakers passed legislation authorizing Gov. Jan Brewer to seek a Medicaid waiver that would permit the state to eliminate Medicaid coverage for 280,000 Arizona residents. The waiver would request an exemption from the “maintenance of effort” provision under the Affordable Care Act, which requires each state to maintain their Medicaid eligibility levels as of March 2010, until at least 2014, as a condition of receiving federal support for Medicaid. Arizona lawmakers say that by obtaining a waiver and cutting coverage to nearly 25 percent of Arizona’s Medicaid enrollees, the state could save $541.5 million annually. Most of those cut would be non-pregnant, non-disabled, childless adults and parents with incomes over 50 percent of the federal poverty level. The Obama administration is unlikely to grant the waiver, but Arizona’s move signals one additional approach states may take in order to challenge federal health care reform initiatives.